Fiat Wealth, That Is The Coinage Of The Banker Regime, Trades Lower In Value, Pivoting The World Into Kondratieff Winter

1) …. The see saw destruction of Fiat Wealth got strongly underway as European Stocks led stocks worldwide lower, as investors assessed equity valuations following the biggest rally since March, and as fears of Greek insolvency arose, and a Portuguese bank failed.

On Monday July 7, 2014, Bloomberg reports European Stocks Drop After Biggest Weekly Rally Since March. The Stoxx Europe 600 Index dropped 0.9 percent with all 19 industry groups retreating. The equity gauge rose 1.8 percent last week as U.S. jobs data exceeded economists’ forecasts and commodity producers rallied. The index traded at 15.6 times the estimated earnings of its members on July 4, near its highest valuation since 2009.

“What we need to see now is earnings growth,” said Michael Kapler, a portfolio manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany. “Companies have to really deliver this time because equities are not so cheap any more. We might have some sort of correction in Europe if this earnings season disappoints, and there will be bigger questions concerning valuations

Alcoa, AA, the largest U.S. aluminum producer, unofficially kicks off the U.S. quarterly earnings season when it releases second-quarter financial results after the close of trading tomorrow. Profit for members of the S&P 500 probably climbed 5 percent in the period, while sales rose 3 percent, according to analyst estimates compiled by Bloomberg.

In Germany, data from the Economy Ministry in Berlin showed industrial production slipped 1.8 percent in May.

Markus Salzmann posts in WSWS Bulgaria’s Financial Instability Fueled by EU-Russia Conflict. In the May 25 European elections support for the BSP collapsed. The opposition conservatives under former Prime Minister Boyko Borisov, who retains much closer relations with the EU and the US, won a clear victory. The DPS subsequently withdrew its support for the government. As a result, early elections will take place on October 5. The current government is to be replaced by a cabinet of technocrats in August.

The principal point of immediate contention in the conflicts and intrigues in Bulgaria is the building of the South Stream pipeline, intended to transport Russian gas to Bulgaria through the Black Sea, bypassing Ukraine, before going on to Austria and Italy. The building of this pipeline, funded mainly by Russian concern Gazprom, would strengthen Russia’s position against Ukraine significantly. It would be able to transport Russian gas to Europe without Moscow being dependent on transit pipelines in Ukraine.

With the outbreak of the Ukraine conflict, the EU and US stepped up pressure on Sofia to put the building of the pipeline on hold. At the beginning of June, a group of US senators led by John McCain visited the Bulgarian prime minister. Two days after the Americans’ visit, Oresharski announced the halting of the building project.

The US ambassador in Sofia, Marcie Ries, threatened Bulgarian firms involved in the building project with sanctions. She justified this by arguing that the Russian firm Stroytransgaz was involved in the consortium building the €3.5 billion section of Bulgarian pipeline. The US has imposed sanctions on the firm’s financier, the oligarch and ally of Russian President Vladimir Putin, Gennady Timchenko.

The temporary halting of South Stream not only met with opposition in Moscow, but also in Rome and Vienna. The Austrian government demonstratively welcomed Putin to Vienna on June 24, where the chiefs of Gazprom and Austrian energy firm OMV signed a contract for the building of South Stream.

In Bulgaria, the BSP supports the project, while Borisov has announced that in the event of an election victory, he would only continue the construction of the pipeline if the contracts conform to EU regulations. He intends to exclude all the companies on US sanctions lists, i.e., firms close to the Kremlin.

Along with the conflicts over South Stream, a conflict is raging behind the scenes over the billions that are to be invested in its construction. The EU has claimed that hundreds of millions have flowed into the pockets of Russian and Bulgarian oligarchs.

There are suspicions that Bulgarian tycoon Delyan Peevski could be behind the banking crisis. The 33-year-old controls a massive media and business empire and is one of the most powerful oligarchs in the country. He sits in parliament for the DPS. Last year, the government tried to appoint Peevski to head the intelligence services, a move that provoked mass protests.

Several months ago, Peevski fell out with the head and main shareholder of KTB, Tzvetan Vassilev, with whom he had worked together for years. KTB was one of the banks that was on the verge of bankruptcy in late June. It has close ties to the BSP and administers the funds of many state concerns.

A war of words has erupted between Peevski and Vassilev. Both claimed they have received death threats.

Regardless of who was behind the crisis, the near collapse of two major banks due to rumours shows the extreme instability of the country. The head of the German Konrad Adenauer Foundation in Sofia declared that the conflicts were endangering the financial stability of the country. Other analysts fear Bulgaria could be compelled to give up the pegging of its national currency to the euro.

The recent events are reminiscent of 1997, when the Bulgarian financial system collapsed after hyperinflation. Since the 1990s, the Bulgarian lev has been linked to the German mark and subsequently the euro. While the population lost everything at the time and hunger protests broke out in Sofia, a number of oligarchs were able to write off their debts due to the devaluation.

In an epic socio-economic change inflationism turned tod destructionism, as risk appetite turned risk aversion, as investors Volatility, ^VIX, trade by XVZ, derisked out of the debt trade in The National Bank of Greece, NBG, Ireland’s Bank, IRE, and Banco Santander, SAN, which led European Financials, EUFN, lower; Argentina’s Bank, BBVA, and India’s Bank, IBN, HDB, led Emerging Market Financials, EMFM, lower; Regional Banks, KRE, Nasdaq Banks, QABA, and Stockbrokers, IAI, led Financial Services, lower; all of which which led Global Financials, IXG, lower; this as Zero Hedge reports European Banks Are In Trouble.

The world is pivoting through peak credit. Popular Notes and Bonds, SHY, EU, TLT, EDV, FLOT, LQD, LWC, PICB, BWX, and MBB, bounced higher from last week’s sell off, as the Benchmark Interest Rate, ^TNX, traded slightly lower from its recent high of 2.65%, to 2.62%; its likely objective is 2.53%

With the failure of credit on July 1, 2014, seen in Aggregate Credit, AGG, trading lower in value as the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%, the world is moving through a historic economic inflection point.

The world is pivoting through peak wealth. Fiat Wealth, defined as World Stocks, VT, Global Financial Institutions, IXG, Nation Investment, EFA, and Yield Bearing Investments, DTN, together with Aggregate Credit, AGG, is is literally being sawn asunder by the failure of trust in the world central banks’ monetary authority to continue to provide investment gain, and global economic growth, as is seen in the Bloomberg report European Stocks Drop With Treasuries as Commodities Fall, and as is seen in the Zero Hedge report Peak Abenomics.

The recovery from the Great Recession of 2008-09 has been the weakest ever, the reason being that the nature of money changed with the provision of the Greenspan Put, which became the Ben Bernanke QE1.

From 2008 onward, the Fed’s policy no longer came from the Humphrey Hawkins dual mandate of employment and growth, and thus have not provided economic recovery. The Global ZIRP monetary policies of the world central banks were designed to change the primary function of money to serve as the basis of fiat wealth investment; and thus birthed the investor, and investment gain, as the centerpiece of economic activity, with the result being the creation of awesome fiat wealth inflation, rather than much of any employment gains.

The California Beach Pundit posts “The world has been stockpiling liquidity instead of spending it. The Fed’s expansion of the money supply has only accommodated an increased demand for that money; that’s why it hasn’t been inflationary. But this should soon start to reverse”. And he adds, “Since late 2008, the Fed has pumped up the supply of bank reserves by over $2.6 trillion through its purchases of Treasuries and MBS. About 94% of those additional reserves currently are held by banks in the form of excess reserves”

The US Fed’s massive purchases of bonds of all types has served to underwrite the US Dollar Hegemonic Empire, and cause a fantastic Global Credit Bubble, which finally burst on July 1, 2014, as the Bond Vigilantes began calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%.

The June 5, 2014 Mario Draghi ECB Mandates for NIRP and Targeted LTRO, together with the June 21, 2014, Mario Draghi ECB Press Announcement Calling For Shared Sovereignty, addresses secular stagnation, defined as low growth, low employment, and low inflation; and introduce the new global empire, that being the Ten Toed Kingdom, with a miry mixture of iron and clay, forming toes of diktat in regional governance and clay in totalitarian collectivism, as is foretold in Bible Prophecy of Daniel 2:25-45.

These Mandates and the Call serve as the EU Economic Manifest, that is the Charter and Club, for Eurozone regional governance, and have birthed the debt serf and debt servitude, as the centerpiece of economic activity, and will become ever more apparent and defined, as the call for shared regional sovereignty becomes ever more trumpeted, as economic deflation worsens when investors increasingly derisk out ofdebt trade investments and deleverage out ofcurrency carry trade investments.

The Business Cycle is one of investing, and its nascent entrance into its final phase, that is Kondratieff Winter, is seen in trade lower in European Financials, EUFN, on June 24, 2014, which is the result of a trade lower in the Euro, FXE, beginning in early May 2014, and its full entrance with the failure of credit, seen in Aggregate Credit, AGG, trading lower in value on July 1, 2014. On July 10, 2014, Global Growth, DNL, traded strongly lower, communicating that investors no longer trust the monetary policies of the world central banks to stimulate investment gains, and global economic growth.

Formerly, credit in the Milton Friedman Free To Choose paradigm, underwrote credit, and investment was the way of life. Now diktat in the Mario Draghi Regional Fascism paradigm, underwrites regional economic governance, and debt servitude is the way of life.

The Eurozone sovereigns, that is theEurozone Nation States, with their policies of investment choice and credit liquidity, no longer support investment gain. Because they are insolvent sovereigns and their banks are insolvent financial institutions, the seigniorage, that is the moneyness, of the entire Banker Regime, is beginning to fail.

News reports communicate that the Eurozone periphery nations, such as Portugal, Italy, Greece and Spain, are loaded with all types of debt, not just Treasury Debt that cannot be repaid; this includes The WSJ reportBad Property Loans Stick to Italian Banks. A Fraction of bad loans has been bought by investors. Other news reports consistently communicate that prosperity has been relegated to the dustbin of history by economic deflation; this includes the CNBC reportEurozone Retail Sales Stall As Households Feel Pain.

Failed sovereigns and failed seigniorage cannot, and does not provide ongoing economic experience of prosperity; such only provide economic deflation and economic chaos.

As foretold in Bible Prophecy of Revelation 13:3-4, that out of the tossing and turning Club Med economic turmoil, new sovereignty and seigniorage will emerge, as regional leaders meet in summits, to renounce national sovereignty and announce shared sovereignty, more specifically regional pooled sovereignty, which will be come though regional framework agreements, whose purpose is to establish regional security stability and sustainability. Do such framework agreements already exist? Open Europe asks Has The ECB Backed German Reform Contracts For The Eurozone?

Bruno Maçães, the Portuguese Minister for Europe, asks in VOX, An Ever Closer Union? He stresses the importance of policy coordination in achieving better integration. One way to do so is via a fiscal union, but this creates unity at the expense of diversity. A second way involves formal contracts and partnerships. But to make this approach less rigid, the political dialogue does not need to be formalised in actual contracts.

An ism is a process which establishes life. Economics is based upon a number of isms; the economic foundation of liberalism is giving way to authoritarianism.

The very nature of economics changed with the trade lower in Credit Investments. that is Aggregate Credit, AGG, on July 1, 2014. It was an extinction event, that terminated the debt investor; and the trade lower in Equity Investments, that is World Stocks, VT, Nation Investment, EFA, Global Financial Institutions, IXG, and Yield Bearing Investments, DTN, on July 7, 2014, terminated the equity investor.

With investors going extinct, on the failure of credit, and the soon coming death of currencies, liberalism’s dynamos are powering down, and authoritarianism’s dynamos are powering up.

Debasement of the coinage of fiat wealth commenced on Monday, July 7, 2014, on fears that Greece, GREK, is an insolvent sovereign, and its bank the National Bank of Greece, NBG, is an insolvent bank, Debasement of the coinage of fiat money, specifically debt deflation in Sovereign Currencies, will occur soon, the reason it has happened yet is the strong demand for currencies in Asia, as is seen in the WSJ report Currency Reserves Swell in Asia. Eventually it will be as in Venezuela, where William Neuman of the NYT posts Profits Vanish in Venezuela After Currency Devaluation.

Out of failure of trust in the Banker Regime’s monetary policies of investment choice and schemes of credit liquidity, the Beast Regime of Revelation 13:3-4, having healed the apparent deadly wound of its economic head, through the establishment of regional framework agreements, will rise to rule economics, with new monetary policies of diktat and schemes of debt servitude.

The singular dynamo of regionalism will develop the Beast Regime’s seigniorage of diktat money, which will coin awesome mandated poverty, where austerity is one’s economic experience.

Jesus Christ, operating in the Economy of God, that is the concept presented by the Apostle Paul in Ephesians 1:10, is acting in stewardship of all things economic and political, to complete, mature, and perfect every age. And as presented in Revelation 6:1-2, has opened the First Seal of the Scroll of End Time Events, to release the First Horseman of The Apocalypse, to effect global coup d etats. The Rider on the White Horse, has the Bow without Any Arrow, and has thus given the Bond Vigilantes, the authority to yield the Bow of Economic Sovereignty, to begin calling the Interest Rate on the US Ten Year Note, ^TNX, from 2.49%, to effect investment coup d etat, destabilizing sovereign authority in the Eurozone and in the US. They will be increasingly successful, in calling the Benchmark Interest Rate progressively higher, producing a new sovereignty and a new seigniorage.

Fiat Money defined as the combination of Aggregate Credit, AGG, and Major World Currencies, DBV, and Emerging Market Currencies, CEW, will soon literally burst apart at the seams. The failure of Credit came on June 1, 2014, with the trade lower in Aggregate Credit, soon the Sovereign Currencies, will trade lower in value; the death of currencies is at hand; and as John Rubino writes in USA Watchdog, The Money Bubble Will Pop.

In the Eurozone, a new sovereign, Jean Claude Juncker, and a new seignior, meaning top dog banker who in the process of coining money takes a cut, Mario Draghi, will lead the way forward in establishing regional economic governance as well as in providing new seigniorage of diktat money, to establish regional security, stability and sustainability. John Vassilopoulos of WSWS reports Greek Government Outlaws Power Workers Strike. The Greek government has again used dictatorial measures to end a strike.

In the new normal Mario Draghi economy of shared sovereignty, and the new normal Jean Claude Juncker economy of negotiated government, the call of liberals for income redistribution will not be met, as the mandates of these two Eurozone Titans and their soon to be appointed regional fascist leaders, will establish increasing austerity for all of the EU’s citizens; these will be replacement for the World Central Bank economy’s Asset Manager tycoons.

The Eurozone will serve as the headquarters, and template, for the development of the Beast Regime of regional economic governance and totalitarian collectivism, which is synonymous with the Ten Toed Kingdom, which is replacing the US Dollar Hegemonic Empire, and the British Empire, now that the 30 Year US Government Bonds, EDV, and the US Ten Year Notes, TLT, are trading lower on the Bond Vigilante’s Call of the Benchmark Interest Rate, $TNX, higher from 2.49% to 2.56%. Economic Collapse Blog posts The Dollar Is In Peril As Global The De-Dollarization Trend Accelerates. And Larry Summers posts The United States’ Global Leadership Has Eroded.

The Chicago Tribune reports Fourth of July weekend toll: 82 shot, 14 of them fatally, in Chicago. For 10 minutes, it seemed like the shooting was everywhere in the South Chicago neighborhood. It started when someone shot and wounded a couple, then two people fired at the shooter, then there was a chase and shots exchanged and a man sitting on a porch was hit. Responding officers kept cutting each other off on their radios as they reported other gunfire in the area late Sunday night and early Monday morning. Then the heavy equipment rolled in: A helicopter and SUVs packed with lockers of rifles. SWAT teams in green coveralls patrolled the streets with uniformed officers.

Macronomy posts The Economic Chaos Risks Of The US Fed’s QE Monetary Policies. The FED currently owns about 33% of the outstanding US Federal debt. As funding needs of the US Treasury are diminishing following the sequester, there is less issuance and the FED ownership of bonds in percentage is rising quicker. Should the Central Bank continue buying the same amounts of bonds, it will own 40% of the outstanding in 2014, then north of 50% in 2015. The subsequent volatility on the interest rate market will increase drastically as the liquidity of the bond market disappears, and the currency could debase very quickly, creating a new crisis.

A cause of concern, the bond market repo activity is facing an increasing number of failures (fails to deliver are on the rise exponentially) due to the large FED holding, which has ripple effect on the overall bond market activity.

Economic growth in a society based on consumption requires credit. In order for credit to grow, or in other words banks to lend, collateral must be available. Since the 2007-2008 financial crisis, high quality collateral has slowly but surely become less available.

If Central Banks continue to buy various government bonds (and US Treasuries are among those bonds), the available collateral will trend lower and the economy will stall, or worst spiral down as a credit crunch will occur at some point. So the FED has no other choice than to slow and even stop its QE if it wants the game to go on.

From the Liza Capo McCormick article in Bloomberg on the 7th of July entitled Bond Anxiety in $1.6 Trillion Repo Market as Failures Soar. “In the relative calm that is the market for U.S. Treasuries, a sense of unease over a vital cog in the financial system’s plumbing is beginning to rise.

The Federal Reserve’s bond purchases combined with demand from banks to meet tightened regulatory requirements is making it harder for traders to easily borrow and lend certain desired securities in the $1.6 trillion-a-day market for repurchase agreements. That’s causing such trades to go uncompleted at some of the highest rates since the financial crisis.

Disruptions in so-called repos, which Wall Street’s biggest banks rely on for their day-to-day financing needs, are another unintended consequence of extraordinary central-bank policies that pulled the economy out of the worst financial crisis since the Great Depression. They also belie the stability projected by bond yields at about record lows.

“You have a little bit of a perfect storm here,” said Stanley Sun, a New York-based interest-rate strategist at Nomura Holdings Inc., one of the 22 primary dealers that bid at Treasury auctions, in a telephone interview June 30.

A smoothly functioning repo market is vital to the health of markets. The fall of Bear Stearns Cos., which was taken over by JPMorgan Chase & Co. in 2008 after an emergency bailout orchestrated by the Fed, and collapse of Lehman Brothers Holdings Inc., whose bankruptcy in September of that year plunged markets into a crisis, was hastened after they lost access to such financing.” – source Bloomberg

Remember financial crisis are always triggered by liquidity crisis. From the same article:

Liquidity Issues

“The effect of all the collateral issues we see now is an indication of not so much how things are, but how bad things will be when you really need liquidity,” said Jeffrey Snider, chief investment strategist at West Palm Beach, Florida-based Alhambra Investment Partners LLC, in a telephone interview June 30. “That’s when you get into potentially dire situations.”

The conditions for repo stress were on display last month. The 2.5 percent note due in May 2024 reached negative 3 percentage points in repo in the days preceding a June 11 Treasury auction of $21 billion in notes to finance government operations.

Dealer Constraints

Repo rates have been most prone to go negative, a situation known as specials in the market, in the days preceding an auction as traders who previously sold the debt seek to buy the securities to cover those positions.

In this week’s note and bond sales, the U.S. plans to auction $27 billion of three-year Treasuries tomorrow, $21 billion of 10-year debt on July 9 and $13 billion of 30-year securities July 10.

Signs of dysfunction are coming at a sensitive time for markets. The Fed is paring its stimulus and futures show traders expect the central bank may start raising interest rates in the middle of next year.

The concern is that dealers, which have pared inventories to meet more-stringent capital requirements required by the 2010 Dodd-Frank Act mandated by the Volcker Rule and Basel III, won’t have as much capacity to handle any surge in volumes or volatility.

Securities Industry and Financial Markets Association data show the average daily trading volume in Treasuries has fallen to $504 billion this year from $570 billion in 2007, even though the amount outstanding has risen to more than $12 trillion from $4.34 trillion.

Available Securities

Bank of America Merrill Lynch’s MOVE Index, a measure of expectations for swings in bond yields based on volatility in over-the-counter options on Treasuries maturing in two to 30 years, reached 52.7 percent on June 30, almost a record low.

The Fed is partly to blame. Through its policy of quantitative easing, it now owns about 20 percent of all Treasuries, or $2.39 trillion. Banks hold $547 billion of Treasury and agency-related debt.

In addition, the Fed’s holdings have shifted in ways that leave fewer central-bank-owned Treasuries available to be borrowed. The shifts were caused by Operation Twist during the November 2011 to December 2012 period when the Fed sold shorter-dated Treasuries and bought more bonds, plus self-imposed central-bank restrictions on holdings of specific maturities.

Stimulus Withdrawal

The Fed’s lack of certain holdings “appears to be driving the surge in fails, which has been concentrated in the on-the-run five- and 10-year notes,” Joe Abate, a money-market strategist in New York at primary dealer Barclays Plc, wrote in a note to clients on June 27. On-the-run refers to the most recently issued Treasuries of a specific maturity.

While the Fed has sought to cut risk in the repo market since the crisis, it still sees the chance that rapid sales of securities, known as fire sales, could disrupt the financial system. Fails reached a record $2.7 trillion in October 2008.

Repos are also important to the Fed because it has been testing a program in the market that is seen as a potential tool to withdraw some of its unprecedented monetary stimulus.

Eric Pajonk, a spokesman at the New York Fed, decline to comment on the Fed’s reaction to the movements in recent weeks in the repo market.

The amount of securities financed daily in the tri-party repo market has declined 18 percent an average $1.60 trillion May, from $1.96 trillion in December 2012, data compiled by the Fed show. In a tri-party agreement, one of two clearing banks functions as the agent for the transaction and holds the security as collateral. JPMorgan Chase & Co. and Bank of New York Mellon Corp. serve as the industry’s clearing banks.

Supply Falls

Another difficulty in the repo market has been the decline in Treasury bill supply, with the U.S. having sold $264 billion fewer short-term bills in the April-through-June period than those that matured, according to John Canavan, a fixed-income strategist at Stone & McCarthy Research Associates in Princeton, New Jersey.

“The repo market itself provides lubricant to the entire Treasury market,” Canavan said in a July 3 telephone interview. “Bills are a key lubricant to the repo market, and the supply of bills has fallen sharply. If this situation were to continue longer-term, it would be a more substantial problem.”” – source Bloomberg.

One of the chief reason therefore behind this rotation has been coming from US Corporate pensions, as indicated by Gertrude Chavez-Dreyfuss and Richard Leong in Reuters in their article from the 24th of April article, US Corporate Pensions Bet On Bonds Even As Prices Seen falling. Major US companies including Clorox and Kraft are favoring more bonds in the mix for their employees’ defined benefit pension plans, even amid signs the three-decade bull run in bonds is on its last legs.

The $2.5 trillion U.S. corporate pension market enjoyed a robust recovery in 2013, paced by stocks, as the Standard & Poor’s 500 Index rose the most since 1997. That helped pension funds close a funding hole that opened after the global credit crisis of 2008, so that the average corporate pension was funded at about 95 percent at the end of 2013, compared with 75 percent at the end of 2012, Mercer Investments data show.

Now that they’re more confident that they have the money to meet their pension obligations, corporate pension managers are pulling back from the perceived risk of the stock market and buying U.S. government and corporate bonds, even though many expect bond prices to fall in coming years.

“Even if interest rates rise more than the market predicts, you do get the income component that offsets the price loss of those bonds,” said Gary Veerman, managing director of U.S. Client Solutions Group at BlackRock in New York, which has $4.4 trillion under management, of which two-thirds are retirement-related assets. Beerman’s group advises corporate treasurers how to manage their pensions. The allocation to bonds by the top 100 publicly-listed U.S. companies in their defined benefit pension plans increased to a median of 39.6 percent in 2013 from 35.9 percent in 2010. Stock allocation in the plans fell to 40.9 percent in 2013 from 44.6 percent in 2010, according to global consulting firm Milliman.”

“Now they’re in a position to say: ‘I don’t need all those equities because my funding status is in the mid- to low-90s,'” said Dan Tremblay, director of institutional fixed-income solutions at Fidelity unit Pyramis in Merrimack, New Hampshire, which manages more than $200 billion.

To further illustrate the “pension fund” effect and the increase in duration risk with the “great rotation” in 2014 from equities to bonds please find below the iBoxx U.S. Pension Index up 11% YTD.

The chart tracks the iBoxx U.S. Pension Index, designed to mirror the performance of a typical plan with defined benefits.

What our “wealth effect” planners at the Fed should take into account is that rising stock prices may do relatively little to bolster the finances of corporate pension funds. Bonds matter because increases in projected distributions put even more pressure on yield hunting leading to an increase in duration risk exposure and high yield exposure. Volatility in funds’ asset value and relatively low interest rates have made managing pensions increasingly difficult for corporate managers, one of the solution they have found is shifting into bonds and away from stocks

As a reminder from our conversation Goodhart’s Law in June 2013: As indicated by CreditSights in their 29th of May 2013 Asset Allocation Trends – 2012 Pension Review: “Key among the prevailing market realities in the post-financial crisis environment has been the extended period Quantitative Easing and the continuation of the Fed’s prevailing zero interest rate policy and in the latest year’s plan asset allocation data there was evidence of the effect this was having. As noted above, historically low interest rates have not only inflated the calculated liabilities of pension plans via the downward pressure on interest rates, they have also deflated assumed plan asset return rates as fixed income has increased as a percentage of plan assets.” – source CreditSights.

So much for the great rotation, given, as indicated in the same report from CreditSights: “One of the notable observations from our data analysis was that there was very little change in the allocation across the plans vs. the prior year. The median allocation to equity fell only marginally (from 50.8% to 50.0%) and the allocation to fixed income, rather than increasing, fell from 37.0% to 36.4%. This suggests that the trend towards Liability Driven Investment has slowed. While this, at least in part, likely reflects that the shifts made over the last seven years have better aligned many plans with their desired allocations, it also is undoubtedly influenced by the interest rate environment.

Historically low interest rates across the full maturity spectrum make it an inopportune time to be increasing the allocation to fixed income assets (or to be increasing the duration of those assets in the portfolio!) ” – source CreditSights.

Hence the reason of our Wicksellian stance relating to the distortion created by ZIRP, because of the increasing duration risk which has to be taken by players such as pension funds!

The trade lower in Stockbrokers, IAI, Investment Bankers, KCE, such as MS, GS, and the Asset Managers, such as BLK, EV, communicates that the age of securitization and financialization, to coin fiat wealth, which was built on trust in the monetary policies of the world central banks,for investment gain is over, through, finished and done. The era of the investor is relegated to the dustbin of history.

A new age of trust in the mandates of regional fascist leaders to coin totalitarian collectivism for regional security, stability and sustainability is underway. The era of the debt serf has come of age.

Michael Ignatieff calls for the development of sovereignty; it’s only a whisper. Sovereignty And The Crisis Of Democratic Politics. Dani Rodrik, a colleague of mine at Harvard, coined the phrase ‘policy space’ to describe what we need. Every country has to have policy space, by which he means political space. We’ve got too much macroeconomic policy which assumes that one size fits all; one size does not fit all. We need policies that are appropriate to the sovereign conditions and histories of the countries that we live in.

Progressive politics must defend and expand the capacity of sovereign democracies to create the ‘policy space’ they need, instead of swallowing austerity medicine concocted by doctors who know nothing of their patient’s specific needs.

I don’t suppose that market regulation is the sum and substance of a progressive politics. There is so much more that a progressive politics stands for: egalitarianism, the rule of law rather than the rule of men, generosity, social compassion, love and respect for learning and innovation. But none of these values can be realised without an economics that resets the relation between market and state.

To a degree we haven’t realised, our sovereignty has been emptied out and because it has, our democracy has been draining away. Sovereignty and democracy are linked. We must feel we are masters in our own house, if our politics is to have any meaning for us. Democracy is not a procedure, an instrument or a technique. It is a way of living a set of values of patriotism, equality and fairness, and it creates a sentiment: the blessed feeling that you live in a place where you are not adrift, you are not a prisoner of fate, where you join with citizens to shape your world.This is the value—the sense of mastery—that a progressive politics can and should deliver to its citizens.

More than any one factor for the dissolution of the sovereignty of the British Empire was the rise of Attlee and his Labor Party in the UK. Robin Phillips, author ofSaints and Scoundrels and writes for a variety of publications; He is currently working on a PhD in historical theology through Kings College, London, posts Remembering Clement Attlee: a Wolf in Sheep’s Clothing. Attlee’s legacy has been seminal in the internationalism that came to dominate the last half of the 20th century. Mr Attlee suggested that the notion of the sovereign states making its own decisions was “as out of date as would be the heptarchy in these islands.” Elsewhere he wrote, “The Labour Party does not regard the British Commonwealth as an end in itself, but only as a factor in the building up of a world federation.” He hoped the League of Nations would be transitional to a one-world government, describing it “as a beginning of the World Federation which it hopes to see established.”

The trade lower in the City of London, Lloyds Banking Group, LYG, on July 8, 2014, from the middle of a broadening top chart pattern, communicates the capitulation of the UK’s David Cameron, to the monetary authority of the ECB, and to the economic sovereignty of the EU. The inertia direction forward for the UK is one More Europe.

The monetary policies of the Banker Regime no longer stimulate global economic growth and trade, as is seen in Nation Investment, EFA, trading strongly lower on the trade lower in the UK, EWU, EUUS, as Shaun Roberts reports Slow Down In The UK’s Rate Of Economic Growth, The Office for National Statistics released this data: Total production decreased by 0.7% between April 2014 and May 2014; Manufacturing was the largest contributor, decreasing by 1.3%. He adds, In the three months to May 2014, production and manufacturing were 11.3% and 7.2% respectively below their figures reached in the pre-downturn GDP peak in Q1 2008.

Norway, NORW, Sweden, EWD, and Denmark, EDEN, traded lower as the Eurozone Financials, EUFN, Eurozone Stocks, EZU, FEZ, European Small Cap Dividends, DFE, and European Nations, led by Portugal, PGAL, and Greece, GREK, continued lower. India, INP, SCIN, Israel, EIS, and the US Small Caps, IWC, IWM, traded lower. Electric Utility, HNP, and China Technology, CQQQ, led China, YAO, lower; as Bloomberg reports Sensex Falls Over 500 Points The BSE Sensex and Nifty slumped more than 2 percent on Tuesday, marking their biggest single-day fall in over 10 months and retreating from record highs hit earlier in the session, after the railway budget raised worries the government would slash spending.

Nation investment in New Zealand, ENZL, traded to a new rally high as Brown Brothers Harriman reports The New Zealand Dollar Rose To A New Multi Year High Just Above $0.88. Fitch lifted the outlook for the country’s AA rating to positive from stable. The central bank meets on July 23 and is expected to hike rates again. A 25bp hike would be the fourth hike this year and would put the cash rate at 3.25%.

On Tuesday, July 8, 2014, fiat wealth, that is the coinage of the Banker Regime, traded lower in value as fears of Greek Insolvency arose, as Mario Draghi pressed Greece for reforms in exchange for a Third Greek Bailout.

Aggregate Credit, AGG, bounced slightly higher, but resides below its January 2014, through July 1, 2014 rally high as Popular Notes and Bonds, such as SHY, EU, TLT, EDV, LQD, LWC, PICB, BWX, and MBB, continued to bounce higher from last week’s sell off, as the Benchmark Interest Rate, ^TNX, traded slightly lower from its recent high of 2.65%, to 2.57%, on its way lower to a likely support at 2.53%. Junk Bonds, JNK, traded lower with stocks.

Robert Wenzel posts on the strong dynamic of Pursuit of Yield Investing in Puerto Rico Municipal Bonds. Puerto Rican general obligation bonds are rated triple-B minus, the most risky investment grade bonds in the market. The 5.0% coupon maturing in 2041 is trading approximately 25 basis points above the coupon rate. Bottom line: There is little fear in this market, despite the fact that number crunchers view Puerto Rico’s financial situation to be worse than that of Greece. PR GOs should be trading hundreds of basis points higher.

Puerto Rico is an insolvent sovereign and has neither investment seigniorage nor fiscal seigniorage; it is a candidate for bondholders to literally own the electricity and water infrastructure and charge whatever rates they may for essential public services.

Without access to credit, Puerto Ricans may come to be beholding to the sovereignty of investment funds such as Franklin Templeton and OppenheimerFunds, for the essentials of life. Most assuredly these people will be living out their lives in perpetual debt servitude.

A new paradigm is emerging. Liberalism is giving way to authoritarianism. Under liberalism bankers, corporations, government, entrepreneurs, and citizens of democracies were the legislators of economic value and the legislators of economic life that shape one’s means and one’s ends.

Now under authoritarianism, currency traders, bond vigilantes, bond traders, and regional fascists working in public private partnerships and in regional governance, are the legislators of economic value and are the legislators that shape one’s means and one’s ends.

Real Estate Follies at the end of the age of fiat wealth. Bloomberg reports Office REITs in U.S. Plan the Most Construction in Decade. Office REITs, FNIO, led by Boston Properties Inc. (BXP), Vornado Realty Trust (VNO) and Kilroy Realty Corp. (KRC), are planning to plow almost $11 billion into new projects, triple the amount just two years ago and the most in data going back to 2004, according to research firm Green Street Advisors Inc. Much of that is focused on the coasts, including San Francisco and New York, the areas with the most demand from both tenants and investors.

The Israeli Stock Exchange could go extinct because of delisting. Bloomberg reports Unintended Consequences Risk $4.4 Billion Israeli Flight. Israel risks losing 15 billion shekels ($4.4 billion) from the Tel-Aviv Stock Exchange because of efforts to limit control of the economy by the country’s wealthiest families.

The regulator may submit a safety report on two reactors at Kyushu Electric Power Co.’s Sendai plant on July 16, paving the way for them to come online before year’s end, the daily Yomiuri Shimbun reported this week. The utility is set to sell ¥20 billion ($197 million) in 10-year bonds Friday at 39 basis points over government debt, its lowest spread for such maturities since 2010, a source said.

Kansai Electric Power Co. and Shikoku Electric Power Co. also plan to offer notes this week as investors are drawn by the industry’s higher-than-average yield premiums. Unprecedented Bank of Japan stimulus has pushed down Japanese corporate spreads to a seven-year low of 22 basis points. That for power companies’ debt is 29 basis points, compared with 105 for utilities worldwide, Bank of America Merrill Lynch data show.

“The fact that the government is in favor of restarting reactors is positive because it shows a firm commitment toward the electric power companies,” said Yasuhiro Matsumoto, the senior manager for the financial services industry at ABeam Consulting Ltd. “Once one restart is approved, others will come one after another, and the pace may quicken. You can’t approve one but turn down others.”

The Sankei, another daily paper, said earlier that the nuclear regulator would give the green light to restarting the Kyushu reactors as early as Wednesday.

The draft inspection report is completed and commissioners are examining the approximately 400-page document, NRA Chairman Shunichi Tanaka told reporters the same day. He declined to say when it will be made public.

All 48 of Japan’s functioning commercial reactors are idled for safety checks after a tsunami wrecked Tokyo Electric Power Co.’s Fukushima No. 1 plant on March 11, 2011, and caused the worst nuclear crisis since Chernobyl in 1986.

Utilities’ expenses have mounted as they’ve had to purchase fossil fuel to make up for nuclear energy. The nation’s 11 power companies had combined net losses of ¥482.7 billion in the three months that ended on March 31, compared with a profit of ¥4.7 billion in the same period in 2010 before the Fukushima disaster started, according to data compiled by Bloomberg.

On Thursday, July 10, 2014, a Portugal banking crisis sparked a global stock selloff. Portugal, PGAL, led nation Investment, EFA, lower. A Portuguese bank named after the Holy Spirit is seen failing. Bloomberg reports European Stocks Decline for a Fifth Day as Luxembourg based Espirito Santo Financial Group SA, which owns 25 percent of Portugal’s second-biggest bank by market value, said it decided to suspend its shares. Banque Privee Espirito Santo SA, fully owned by ESFG, said on July 8 that there was a delay in payments of some of the last maturities of short-term debt securities issued by ESI. Portugal’s PSI 20 tumbled 3 percent, the most among 18 western-European markets, sending its seven-day slump to 11 percent. The index trades at its lowest level since October.

The value of equities in Portugal, Italy, Greece, and Spain, is falling after rising 13 percent in the first six months of 2014, compared with a 2 percent gain for the market capitalization of stocks in France and Germany. The ratio between the two reached an almost three-year high. The last time shares in the so-called peripheral European nations rallied so much relative to those in the biggest economies, they lost about half their value in the following year.

Bloomberg reports Espirito Santo Bonds Tumble to Records Amid Missed Note PaymentsBanco Espirito Santo has been “adequately isolated” by the Bank of Portugal from the financial problems, Parliamentary Affairs Minister Luis Marques Guedes said on July 3. The bank was the only one of the three biggest publicly traded Portuguese lenders that didn’t request state aid after the country received a European Union-led bailout in May 2011.

The coinage of the entire Banker Regime is failing, as investors greed has turned to fear that European leaders are unable to contain investment losses from what are most definitely insolvent banks.

A new coinage, that of the Beast Regime is emerging, it is totalitarian collectivism to establish regional security, stability and sustainability.

Draghi said in London Speech “There is a case for some form of common governance over structural reforms” … and .. “This is because the outcome of structural reforms, a continuously high level of productivity and competitiveness, is not merely in a country’s own interest. It is in the interest of the union as a whole.”

Draghi has repeatedly said the ECB’s ultra-loose monetary policy isn’t sufficient to sustain the euro area’s fragile recovery if governments backslide. European Union finance ministers meeting in Brussels this week signaled a willingness to give politicians extra leeway so long as they take measures to fix their economies. They then clashed as Italian Prime Minister Matteo Renzi pushed back against austerity measures.

ECB Executive Board member Benoit Coeure said earlier yesterday that convergence could be complemented by action such as a European effort to increase investment by channeling private savings. It could culminate in the transfer of budgetary responsibilities to the European level, he said in Athens.

“But let me add an important note of caution,” Coeure said. “This can only occur once trust has been restored across countries and within countries, i.e. after growth has resumed, unemployment and inequalities have receded, and economies have sufficiently converged. What we are talking about is a new social contract among European countries.”

While reiterating his message that the ECB is ready to use “unconventional instruments”, code for large-scale asset buying, if needed, he devoted most of a speech in London to pressing for closer European integration to deliver growth and jobs.

“What is essential now is that these rules are enforced,” he said in the text of his speech, a memorial lecture on Wednesday in honour of the late Italian minister and ECB policymaker Tommaso Padoa-Schioppa.

“To unwind the consolidation that has been achieved, and in doing so to divest the rules of credibility, would be self-defeating for all countries,” Draghi said.

His comments come as euro zone policymakers debate the flexibility of their fiscal rules, with Italian Prime Minister Matteo Renzi leading calls to move from austerity to expansion.

Draghi appeared to push back: “Fiscal rules should be viewed in the national debate as promoting growth-friendly fiscal consolidation and not simply as a painful accounting exercise.”

The ECB president added that high debt made countries more vulnerable in the event of financial shocks.

Furthermore, only by showing a willingness to respect common fiscal rules could euro zone states achieve the mutual trust that is a prerequisite for integration in other areas, he said.

Pressing for closer integration, Draghi urged euro zone states to align their approach to structural reforms, efforts to shape up economies by, for example, liberalising labour markets, using the template of the common fiscal rules.

“There is a strong case for us to apply the same principles to the governance of structural reforms as we do to fiscal governance,” he said. “The essential cohesion of the union depends on it.”

The return of market confidence in the euro area stemmed in good part from the efforts made by some countries to shape up their economies after the euro zone crisis took hold, he said.

Establishing rules on structural reforms at a European level could also help governments implement them, he said.

The experience of the International Monetary Fund had shown that, with discipline imposed by supranational bodies, “the debate can be framed not in terms of whether, but in terms of how reform needs to take place.”

European governments are not powerful enough individually to be able to fully exercise their sovereignty alone, Draghi said.

“To serve their purpose, they have to learn to govern together; they have to learn to be sovereign together so as respond to their citizens’ needs,” he added. “Those needs today are growth and job creation.”

Taken as whole, these series of Mario Draghi Mandates and Calls introduce a new global empire, that being the Ten Toed Kingdom, with a miry mixture of iron and clay, forming toes of diktat in regional governance and clay in totalitarian collectivism, as is foretold in Bible Prophecy of Daniel 2:25-45.

The Mario Draghi Calls and Mandates serve as the EU Economic Manifest, that is the Charter and Club, for Eurozone regional economic governance, and have birthed the debt serf and debt servitude, as the centerpiece of economic activity, and will become ever more apparent and defined, as the call for shared regional sovereignty becomes ever more trumpeted, as economic deflation worsens when investors increasingly derisk out ofdebt trade investments and deleverage out ofcurrency carry trade investments.

John Redwood posts The Ghosts Of Hampden, Pym And Eliot Should Haunt Parliament Today. Members of Parliament are heirs to a great tradition. Some of our predecessors took great personal risks to defend and extend the liberties of Englishmen and women. They fought to prevent the executive government, the Crown, exercising too much arbitrary power at the expense of the people. Today we need to remember that when Parliament debates whether important matters of criminal justice, recently repatriated to UK control, should be surrendered to the EU. John Hampden, John Pym and John Eliot fought against a Crown which wanted to presume to itself the power to tax without reference to the grievances and rights of those paying the bills. They fought to uphold the right of Parliament to fashion the law and ensure its fair enforcement. John Eliot died prematurely from his stay in prison for refusing to accept Ship money. John Hampden died of his wounds in an early battle of the civil war. Their cause was just and ultimately upheld. Today the threat to our liberties and right of self government comes not from the Crown but from the EU. Some of us this day will argue against surrendering any criminal justice powers to the EU. We accept the need to co-operate with the police and criminal justice systems of our neighbours to track criminals and bring them to court. This can be done by bilateral agreements which preserve the authority of the UK Parliament and the sovereignty of the UK electorate. Eliot, Pym and Hampden would expect no less.

Open Europe reports Juncker: I Don’t Believe In A United States of Europe.During his hearing with Nigel Farage’s Europe of Freedom and Direct Democracy (EFDD) group in the European Parliament yesterday, European Commission President-designate Jean-Claude Juncker said, “I don’t believe in a United States of Europe…I’m not a federalist in the British sense…I’m not someone who wants to reinforce the centre in a stupid way to the detriment of the member states.” He added, “There isn’t such a thing as the European people.” Separately, during his hearing with the Greens group, Juncker said, “There shouldn’t be unfair competition between [EU] countries on corporate taxes” – and advocated a common EU corporate tax base. TimesEuropean VoiceFTWSJEUobserver.

With the trade higher in Japanese Yen, FXY, and the trade lower in the Euro, FXE, a number of popular Euro Yen Currency Carry Trades unwound. With the sharp trade lower in the EUR/JPY, investors deleveraged out of LUX, NXPI, PHG, VE, UN, E, TOT, RDS-B, ING, and GLOG,

All other Sovereign Currencies, with the exception of the Swedish Krona, FXS, traded lower, stimulating the US Dollar. $USD, UUP, to trade slightly higher. Mark Chandler remarks the Swedish Krona and Norwegian Krone have been in play recently as the former surprised with a 50 bp rate cut, and the latter sounded dovish.

The trade lower in International Energy, IPW, such as E, TOT, RDS-B, SSL, STO, SU, IMO, CNQ, SNP, BP, CVX, XOM, ECA, Energy Services, OIH, such as SLB, HAL, BHI, NGS, FET, WFT, PDS, NOV, OIS, and Natural Gas, UNG, and DNL, all of which are global currency carry trade investments, communicates that the Global Petro Dollar Empire is being relegated to the dustbin of history. These represent stranded investments; investors will not be committing any new capital investment to Global Natural Resources, IGE, development.

On July 10, 2014, Gold was established as a safe haven investment while Precious Metal Mining Stocks manifest bearish engulfing.

The investment demand for safe assets that began in June 2014 was confirmed, with Gold, GLD, and Silver, SLV, trading higher.

The Precious Metal Mining Stocks, GDX, GDXJ, SIL, and SILJ, such as Gold Miner, FNV, AWM, and Silver Miners, SSRI, FSM, manifested bearish engulfing and traded lower; these appear to be topped out in value, while only God knows how much higher gold will go. Bloomberg reports Gold Reaches 16-Week High as Portugal Spur Haven Buying. The Google Finance chart of the Gold Miners, GDX, shows a 26% rise year-to-date, compared to 10% for Gold, GLD. Look for the Gold Miners to disconnect from the price of Gold, GLD, and tumble lower with all fiat wealth investments into the Pit of Financial Abandon.

The Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.53%, with an objective seen lower, somewhere between 2.51% and 2.49. Aggregate Credit, AGG, traded weakly higher. Junk Bonds, JNK, traded strongly lower, down 0.4% for the week. European Credit, EU, traded lower as Bloomberg reports Greece Cites Market Conditions as Bond Sale Misses Target. Portugal’s bonds led a selloff in securities from the region’s so-called periphery nations this week on instability in that nation’s banks. Greece’s transaction went ahead “despite very unfavorable conditions in international markets and especially in periphery, today and yesterday,” the Finance Ministry in Athens said in a statement.

On Friday, July 11, 2014, credit guarantees are seen as worthless. The age of credit featured Wildcat Finance, a Doug Noland term, an era where financiers, bit, ripped and tore each other apart to be top dog banker in investment deals. The age of debt servitude, will feature, Wildcat Governance, where tyrants, bite, rip, and tear one another apart, to be top dog ruler in public private partnerships.

Zachary Tracer and Clea Benson of Bloomberg report US Regulators Stiffen Standards for Mortgage Insurers. Radian Group and MGIC Investment are among mortgage insurers that would need to fill a financial gap under new financial strength rules proposed by the Federal Housing Finance Agency. Radian said it would need about $850 million to meet the standard now and expects to be able to comply within a two-year transition period allowed under the rules. MGIC didn’t provide a figure and said it faced a ‘material shortfall.’ Genworth Financial said yesterday that it may need as much as $550 million. U.S. regulators are seeking to stiffen standards for mortgage insurers that back loans sold to Fannie Mae and Freddie Mac to prevent a repeat of the losses the government-backed firms faced in the 2008 financial crisis.”

Bloomberg reports McClendon Wildcats For Junk Funding. Aubrey McClendon is returning to his wildcatter roots as the ousted co-founder of Chesapeake Energy Corp. prepares to tap the junk-bond market to help finance what will be the most highly leveraged energy exploration company.

A unit of McClendon’s American Energy Partners LP, NOA, is seeking $1.4 billion, according to a statement from Moody’s Investors Service, which assigned the debt a Caa1 rating. That grade, denoting securities of “very high risk” and “poor credit standing,” reflects undeveloped reserves and “prospective” acreage in Permian Basin drilling rights being purchased from closely held Enduring Resources.

American Energy management and two partner firms are putting up $1.15 billion of equity, leaving potential creditors to finance the bulk of the purchase in a business that will be the most highly leveraged among energy exploration and production companies rated by Moody’s, according to the statement. McClendon previously saddled Chesapeake with $13.3 billion of debt and turned to asset sales in 2012 after falling gas prices led the company to warn it might not be able to service its obligations.

Energy exploration and production companies are the biggest subset of borrowers in the Bloomberg USD High Yield Corporate Bond index, making up more than 7 percent of the $1.44 trillion gauge.

The company’s leverage would be higher than other exploration and production companies rated by Moody’s, which calculates that metric based on debt in relation to reserves and production.

India, INP, SCIN, SCIF, SMIN, EPI, traded lower as Keith Jones of WSWS reports India: BJP Tables Right Wing, Pro Investor Budget. The Jaitley budget launched a drive to slash and ultimately eliminate food, fuel and fertilizer-price subsidies. And Jaitley said that increased revenue is a key part of the government’s fiscal consolidation, ie, deficit reduction, strategy. In the budget the government vowed that within the next twelve months it will complete negotiations with the states to replace various state and national taxes with an all-India Goods and Services Tax. Most advanced capitalist countries already have such a consumption tax and it has been an important instrument for implementing a fiscal counter revolution in which the burden of taxation has been shifted ever more from big business and the most privileged to working people. And the government is counting on disinvestment, the partial or complete privatization of public sector companies, to significantly bolster government revenue.

The BJP budget outlined ambitious plans to give business, through so-called Private Public Partnerships (PPPs), a pivotal role in the building and administration of all manner of physical and social infrastructure. Jaitley boasted that India is already the world’s largest PPP market.

Indian big business is desperate for a quick boost in economic growth so as to escape from large debt-burdens and revive foreign investors’ interest in the Indian economy.

On July 10, 2014, the Banker Regime’s coinage of fiat wealth experienced strong debasement, as investors no longer trust the monetary policies of the world central banks to stimulate investment gains, the development of Global Natural resources, IGE, provide for Global Growth, DNL, procure Nation Investment, EFA, and Emerging Market Nation Investment, EEM.

It is out of waves of Club Med, that is Portugal, Greece, Italy and Spain, sovereign, banking, and corporate insolvency, that diktat coming through the Mario Draghi Regional Fascism paradigm, underwrites regional economic governance, and debt servitude as the way of life, as investors derisk out of debt trades and deleverage out of currency carry trades.

The final phase of the Business Cycle, that is Kondratieff Winter, is an experience in debasement of everything, as destructionism replaces inflationism.

Debasement of the coinage of fiat wealth commenced on Monday, July 7, 2014, on fears that Greece, GREK, is an insolvent sovereign, and its bank the National Bank of Greece, NBG, is an insolvent bank,

Debasement of the coinage of fiat money, specifically debt deflation in Sovereign Currencies, commenced on July 11, 2014, with a sell by the currency traders of the Canadian Dollar, FXC,

2) … The world pivots into Kondratieff Winter, the final phase of the Business Cycle.

The Business Cycle is one of investing, and it is an experience in boom and bust caused by the expansion and contraction of credit, where people come to trust in monetary policies of sovereigns, who provide seigniorage, via monetary policies and schemes of control, for economic life.

The Cycle’s Abundant Summer came in 1971, when President Nixon went off the gold standard to fund the Vietnam War with Treasury Debt, TLT, and the sovereignty of the Milton Friedman Free To Choose paradigm, underwrote money flows across borders, as credit expanded via the speculative leveraged investment community, with the result that international trade supported investment as the way of life, developing Global Natural Resources, IGE, and establishing global growth, DNL.

The Business Cycle’s Bountiful Harvest began in Q2, 2012, with a plummeting of European periphery yields via the Mario Draghi “Do Whatever It Takes” Pledge of LTRO 1, and 2, and completed in Q2, 2014, with a plentitude of credit issuance, that is money creation, as Doug Noland reports in 2014 vs 2007.

This year’s booming M&A market has posted the strongest activity since 2007. Second quarter global M&A volume of $1.06 TN was up 72% from the year ago period. Here at home, M&A more than doubled year-on-year to $473 billion, pushing record first-half volume to $749 billion. The proliferation of deals was fueled by the loosest Credit conditions in years. First-half global corporate bond issuance hit an all-time high $2.29 TN. A record $286 billion of junk bonds were issued globally, as average junk yields traded to the lowest level ever. At $642 billion, first-half U.S. investment-grade company bond sales easily posted an all-time high. The first six months of 2014 also saw record issuance of collateralized loan obligations (CLOs). A record number of global IPOs were sold in the first half, with $90.6 billion of offerings 54% above comparable 2013. Led by technology and biotechnology issues, U.S. IPO sales enjoyed the strongest first-half since the height of the technology bubble back in 2000. According to Dealogic, year-to-date total global sales of corporate stock and equity-linked securities reached an unmatched $510 billion, outpacing 2007’s record pace.

The entrance into the final phase of the Business Cycle, Kondratieff Winter, is marked by debasement devaluation, and economic deflation. This is seen in the trade lower in European Financials, EUFN, on June 24, 2014, which is the result of a trade lower in the Euro, FXE, beginning in early May 2014, and its full entrance with the failure of credit, seen in Aggregate Credit, AGG, trading lower on July 1, 2014.

Following, on Tuesday, July 8, 2014, fiat wealth, that is the coinage of the Banker Regime, traded lower in value as fears of Greek insolvency arose, as Mario Draghi pressed Greece for reforms in exchange for a Third Greek Bailout, and as fears of Portugal banking insolvency arose.

Then, on July 11, 2014, investors sold out of Commodiites, DBC, DJP; specifically a trade lower in Oil, USO, OIL, BNO and Agricultural Commodities, RJA, and that together with a sell by the currency traders of the Canadian Dollar, FXC, caused Commodity Currencies, CCX, to trade lower. The Loonie is the first of Banker Regime’s coinage of currencies, to experience debasement.

Debt deflation, specifically competitive currency devaluation, is an inherent part of the final phase of the Business Cycle, it doesn’t come though nations selling their currencies, rather it comes through the combined action of bond vigilantes and currency traders carrying out a war of economic destruction against the world central banks; the result of which will be global economic deflation as reported by Nancy Hanover For Profit Education Chain Corinthian College Implodes. Corinthian College plans to sell or close its colleges and trades schools, affecting 72,000 students in the US and Canada.

The economic life experience in Kondratieff Winter is one of debt servitude. Kenneth Rogoff writes in Project Syndicate Europe’s Debt Wish It is difficult to see how Europe can revive economic growth without significant debt restructuring or rescheduling. Europe’s politicians seem utterly unable to contemplate this scenario, thus placing a huge burden on the ECB.

Beginning in 1971 when President Nixon took the US off the gold standard to fund the Vietnam War, the world has been based upon a debt based monetary system. The Eurozone’s debt cannot, and will not forgiven; there will be no debt jubilee.

All of the Eurozone debt will be applied to every man, woman, and child in the EU. Through regional framework agreements, the EU will become a panopticon of debt servitude where former citizens of democratic nation states become zines of regional economic governance, these regional debt serfs will be economic zombies living in a land of austerity. Periphery nations will be hollow moons orbiting around Planet Brussels and Planet Germany. The Telegraph reports Germany Gives Green Light To European Banking Union. With the laws, Germany is pressing ahead of EU requirements in protecting German taxpayers from having to foot the bill when a bank gets into trouble. Instead, in a process dubbed a “bail-in”, creditors and owners will have to take losses from 2015, a year before EU rules take effect. The European Central Bank will begin supervision of big banks across the 18 countries that use the euro later this year in a first step in banking union.

Revolution. Marketwatch posts Portugal’s Banking Turmoil Revives Darkest Nightmares About Europe. And Peter Wise of FT reports The Espírito Santos Are No Strangers To Trouble. In the wake of Portugal’s 1974 revolution, several members of the banking dynasty were imprisoned for months by the radical left wing military. After their release, they fled in disguise across the Spanish border to escape probable rearrest. Forty years later, Portugal’s most influential business family again finds itself at the centre of a storm. Fears over the health of Banco Espírito Santo, one of the country’s biggest banks, have triggered a European stock market sell-off and raised questions over Lisbon’s capacity to fend for itself after withdrawing from an international rescue programme. Ricardo Espírito Santo Salgado, 70, head of a business dynasty that goes back almost 150 years, is being forced to step down early after 22 years as BES’s executive chairman as regulators detach the management of the bank from a family riven by rivalries and facing deep financial difficulties.

Regional war. Andrea Thomas of Dow Jones reports Germany warned that its economic growth rate slowed in the second quarter because of the Ukraine-Russia conflict and an unusually weak seasonal pick-up this spring, but it stressed that the economy’s overall upward trend was intact. The warning from the country’s economics ministry shows that the stand-off between western countries and Russia over the future of Ukraine has already hurt German companies, the biggest of which are highly exposed to the Russian market.

Global war. Turkey, TUR, is very much the World’s Cross Road, and it is continually seeking to retain it status as a viable nation investment destination; this status will end soon.

Remo Kernizi remarks Iraq’s recent banning of cargo flights to Erbil and Suleymaniah was meant to punish Turkey and Kurdistan since the only way left for Turkey to export its goods to Iraqi cities is by air (road transport is cut off). It is time Kurdistan declares its independence, own its air space and right to export its crude w/o prospect of legal challenge from Baghdad once and for all.

Turkey is going to be the doormat, transit center, and fulcrum point for the Bible prophesied Psalm 83 War, the Ezekiel 38 War, and the rise of the Sovereign to his rule in Jerusalem.

Gospel And Prophecy relates Turkey At The Crossroads. Jerusalem was ruled by Turkey a century ago. It had been a part of the Ottoman Empire for four centuries.

Over two millennia ago, the kings of the North and South fought repeatedly over the territory of what was then Judah, the ancient nation of the Jews. The two dynasties were the successor states to Alexander’s Greek Empire. Daniel 11 contains a detailed prophecy from the sixth century B.C. that was largely fulfilled in the second century before Christ. However, it was not fulfilled in its entirety. Verses 40-41 of the chapter shows that the final part of the prophecy is still future: “At the time of the end the king of the South shall attack him; and the king of the North shall come against him like a whirlwind, with chariots, horsemen, and with many ships; and he shall enter the countries, overwhelm them, and pass through. He shall also enter the Glorious [Holy] Land, and many countries shall be overthrown.”

(Being at the crossroads), the country now known as Turkey will be involved in these end-time events

Specifically it is out of waves of Club Med, that is Portugal, Greece, Italy and Spain, sovereign, banking, and corporate insolvency, that diktat in the Mario Draghi Regional Fascism paradigm, underwrites regional economic governance, and debt servitude as the way of life, as investors derisk out of debt trades and deleverage out of currency carry trades.

The emergence of a new way of life of debt servitude is seen in the Bloomberg report Turkish Current Account Recovery Exposes Deficit of Trust. Analysts are questioning whether the improvement in Turkey’s, TUR, current-account deficit is sustainable as mounting export risks and prospects for rising imports highlight a key financial vulnerability.

The shortfall narrowed to $3.4 billion in May, according to data published by the central bank today. That took the gap to $19.8 billion in the first five months, down 39 percent from the same period last year. While Turkey’s two-year note yields have posted the second-biggest decline in emerging markets in 2014, analysts including Philippe Dauba-Pantanacce at Standard Chartered Plc say investors aren’t counting on the deficit to keep dropping.

While the central bank is entering a rate-cutting cycle that may boost domestic demand, fighting in neighboring Iraq and a euro-region recovery facing new financial shocks are threatening prospects for exports to Turkey’s biggest markets. The current account is the nation’s “Achilles’ heel,” and improvement may prove “temporary,” Dauba-Pantanacce said.

“A softening of European demand combined with steep headwinds for exports via land on the southern borders might dent the successful export story,” he said by e-mail yesterday. “On the import side, Turkey remains vulnerable to any pickup in domestic demand.”

To emphasize, a New Beast, seen in Revelation 13:1-4, is rising to replace the Creature from Jekyll Island. It is headed by A New Charlemagne, seen in Revelation 13:5-10, and a New Monetary High Priest, seen in Revelation 13:11-18. These are rising in sovereignty and seigniorage, to establish the new coinage of totalitarian collectivism it will be the medium of exchange that all trust in for economic life experience.

The Banker Regime was characterized by democratic deficit, specifically regulatory capture and financial intermediation, that is by crony capitalists, such as Johnson and Johnson, JNJ, and by financial intermediaries, such as the Primary Dealers, KCE, such as MS, who benefited from POMO.

John Cochrane writes in the WSJ, Ideas for Renewing American Prosperity. Washington is stuck because that serves its interests. Long laws and vague regulations amount to arbitrary power. The administration uses this power to buy off allies and to silence opponents. Big businesses, public employee unions and the well-connected get subsidies and protection, in return for political support. And silence: No insurance company will speak out against ObamaCare or the Department of Health and Human Services. No bank will speak out against Dodd-Frank or the Securities and Exchange Commission. Agencies from the Environmental Protection Agency to the Internal Revenue Service wait in the wings to punish the unwary … in the end, only an outraged electorate will bring change, and growth.

The Beast Regime will be characterized by the most extreme type of democratic deficit, specifically regulatory oversight of the factors of production, and economic intermediation, by regional fascists.

Open Europe posts May Comes Under Fire For Decision To Opt Back Into European Arrest Warrant;

Grayling relates the whole area of EU justice and home affairs needs to be renegotiated. During yesterday’s Commons debate about the UK opting back in to 35 EU crime and policing laws, Home Secretary Theresa May justified the decision to opt back in to the European Arrest Warrant on the basis that UK law had been changed to introduce a proportionality test, and to allow extradition requests to be turned down if they relate to actions which took part in the UK but are not classified as criminal offences in the UK. However, the government came under fire from a number of Conservative backbenchers for effectively transferring new powers to the EU. May confirmed that once negotiations between the UK, the European Commission and other member states have been concluded, MPs will vote on the final package. Justice Secretary Chris Grayling argued that under a majority Conservative government, “The whole area of justice and home affairs needs to be part of [the EU] renegotiation process.” FTTelegraphIndependentTimesGuardianGuardian: Editorial

John Redwood posts European Criminal Justice And The Sovereignty Of The British people. Yesterday, Parliament debated whether to opt back in to 35 of the EU Criminal Justice measures. We have recently rightly opted out of all 135 measures, as we were entitled to under our version of the centralising Lisbon Treaty. I and others told Parliament why we do not wish to opt back in to anything.

On June 15th 1215 at Runnymede the King conceded an important grant of liberties to Englishmen called Magna Carta. Though this was just one of many evolving constitutional documents thrown up in our history of curbing the powers of executive government and building a stronger democratic Parliament to curb excessive state power, it has become one of the earliest and most iconic. It gave Englishmen the right to fair trial under English law with proportionate punishments for the guilty. It set up a forerunner of Parliament, an elected council of 25, to supervise the settlement and check up on the government’s good faith in implementing it.

The government plans to celebrate and commemorate this event next year. It is no way to do so by passing control of these important matters of justice to the European Union. I and like minded colleagues fully understand the need for cross border police collaboration, for some common investigations of cross border crime with agencies from other countries, and the need from time to time to extradite possible criminals for trial elsewhere. We do this by Extradition Treaty or agreement with other countries in all but the EU.

The EU wishes us to have different arrangements in the EU, submitting our control and jurisdiction to EU and European Court jurisdiction. This to me is a step too far, and a needless sacrifice of the sovereignty of the British people.

The government argued that the European Arrest Warrant was necessary to get back nasty criminals for trial who had travelled to EU countries. We explained to them that we too wish to see serious crime pursued across frontiers. We wish to have an Extradition Treaty with the EU just as we have such treaties with many non EU countries. That is a better route than putting ourselves under the control of the ECJ and the Commission. We can change, influence or cancel an Extradition Treaty if we wish. Once we have opted into EU criminal justice we are powerless to change anything unless 27 other EU countries, the Commission and the European Parliament agree.

Late stage speculative credit bubbles grow into wild animals, for example The Bad Bitch, that is Scarlet Harlot known as Mystery Babylon, seen in Revelation 17:1-5. God, is calling His People, that is the Elect of God, to come out from the Empire of Deceit, with its slave economy, to experience life in Christ, and the freedom of the economy of God, as presented by the Apostle Paul in Ephesians 1:10.

3) … Living in the inner city, that is the downtown area, I have consistently been a bone for psychopaths to chew on.

Credit Bubble Stocks posts Silver Is A Very Crowded Long Again. The Silver Miners are in the “sweet spot” being short at today’s price of 20.57. Currently, the market price of Silver is determined by industrial demand. And inasmuch as the world has just entered Kondratieff Winter, the price of silver will soon fall lower with the debasement of all things that takes place in the final phase of the Business Cycle. Beginning in 2015, future price rises above 19.50, the current 200 day moving average, should be bought as such a rise would indicate an investment demand for silver. Gold should be bought and stored in a physically safe place, as it is the only safe haven investment available.

5) … Like Duane and Shelly Muir, for me it’s Vacation Time.

Jesus said in Luke 21:28, When these things begin to take place, stand up and lift up your heads, because your redemption is drawing near. Enjoy Johnny Cash, Goin By The Book.